Wells Fargo’s Best Growth Stocks: 28 Stocks With The Highest Consensus EPS Growth Estimates

23. Planet Fitness, Inc. (NYSE:PLNT)

Consensus Long-Term EPS Growth Estimate: 12%

Number of Hedge Fund Holders: 34

Planet Fitness, Inc. (NYSE:PLNT) is a fitness center operator that operates through franchises and equipment sales. The firm’s self-owned stores which it operates under the Planet Fitness brand are its largest source of revenue. These stores accounted for 45% of Planet Fitness, Inc. (NYSE:PLNT)’s revenue during H1 2024, and they were followed by franchise revenue which accounted for 31% of the firm’s sales. Consequently, consumer spending on fitness and Planet Fitness, Inc. (NYSE:PLNT)’s ability to increase its memberships along with stable operations are the keys to the firm’s hypothesis. The firm also depends on the ability to open new stores, which has been constrained lately due to the slowdown in the real estate industry because of high interest rates. Planet Fitness, Inc. (NYSE:PLNT) is currently seeking to grow revenue by increasing its Classic membership fees, as it hopes to attract more consumers after witnessing growth in the premium Black membership segment. Consequently, membership growth and store expansion can lead to tailwinds or headwinds for the shares.

During the Q3 2024 earnings call, Planet Fitness, Inc. (NYSE:PLNT)’s management shared how retail store closures can play into its store expansion plans. Here is what they said:

“We – I read a recent study that said there were about 5,300 closures last year and there will be north of 6,000 closures this year. And we do see that as an opportunity for Planet Fitness and to work in partnership with our franchisees. Our real estate team is engaged with brokers on a very regular basis to have line of sight to where space maybe becoming available and then partnering with our franchisees on that availability where there’s an opportunity to develop a new club. So I think you’re spot on. And we’re seeing the same trends. We know that’s market specific. It’s not in every market, but there’s a lot of space coming online.

And I think the other thing we’ve talked about it a little bit but have an opportunity to talk about it more is really the resilience of our business and the durability of our cash flows. When you think about even coming through a once in a lifetime global pandemic where our clubs were closed for in some municipalities for extended periods of time. We did not have one club permanent closure during COVID for financial reasons. I think that absolutely speaks to the resilience of our business and should make us very attractive to developers and landlords when space becomes available because of their confidence in our ability to fulfill lease terms. So we see that as certainly a potential tailwind.”